Question

Mackinaw Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 20,200 actual direct labor-hours and incurred $142,500 of actual manufacturing overhead cost. They had estimated at the beginning of the year that 17,600 direct labor-hours would be worked and $140,800 of manufacturing overhead costs incurred. The Corporation had calculated a predetermined overhead rate of $8 per direct labor-hour. The Corporation's manufacturing overhead for the year was:

Answer 1

The Corporation's manufacturing overhead for the year was - $19,100

Step-by-step explanation:

Given information,

Actual direct labor-hours - 20,200

Actual manufacturing overhead cost - $142,500

Direct labor-hours - 17,600

Manufacturing overhead costs incurred - $140,800

Predetermined overhead rate for per direct labor-hour - $8

By using these above information, the Corporation's manufacturing overhead can be computed. The steps for calculation is shown below:

Step 1 : First, we have to compute manufacture overhead rate.

Step 2: Than , finally Corporation's manufacturing overhead come.

So,

Manufacture overhead rate = Actual direct labor-hours × Predetermined overhead rate

= 20,200 × $8

= $161,600

Now, Corporation's manufacturing overhead = Actual overhead rate = Applied overhead rate

= $142,500 - $161,600

= - $19,100

The Corporation's manufacturing overhead shows negative amount which means it is over applied as it is greater than actual one.

Thus, The Corporation's manufacturing overhead for the year was - $19,100